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There has been much talk of an ageing crisis in Europe, as fertility rates fall and longevity increases. But this concern is overstated: with efficient capital markets and flexible labour markets, it should be possible to accommodate changes in life expectancy and in the size of the potential workforce. The real crisis of ageing is in sub-Saharan Africa. A combination of high fertility, rising longevity, civil war and HIV/AIDS lies behind a unique transformation of the demographic structure in which, unlike any other regions in the world, falling life expectancy at birth is associated with rising life expectancy at later ages. Demographers describe the probability of death at age t, conditional on being alive at the start of age t, by a hazard function. The hazard function typically has an asymmetric bow shape with the highest risk of death early in life and, increasingly, from the late forties. ‘Normal’ demographic change over time sees a rapid fall in mortality at birth and infancy, arising from basic improvements in public health, rising living standards and so on. Later in life the hazard also falls, due to the same factors plus, it is argued by some demographers, an increasing length of life ‘manufactured’ by modern medical techniques and in the future, possibly, by genetics. Africa’s crisis Africa in recent years has followed a different path. Improvements in public health and in medical technology (albeit limited by the slow growth in per capita real income) have lowered the hazard for infants and the elderly. But conflict and viruses have increased the hazard rate among prime age adults. The change in hazard rates has generated the apparent perversities in life expectancies at different ages. Sub-Saharan Africa may yet end up with an age structure that looks very much like other ageing countries, but by a very different route. Policy responses Necessary responses to this situation involve political, healthcare and economic interventions. I focus on the last one here. The stylised model of the economic response to ageing assumes households wish to smooth consumption over lifetimes, perhaps through saving, intergenerational transfers and other, tax-financed transfers or donations. Thus increasing longevity should lead to greater savings by prime age households. This model has been turned on its head in some sub-Saharan countries. Ann Case and Angus Deaton are among a number of academics who have written about the consequences of the universal state pension that operates in South Africa. With older people ‘skipping’ a generation to care for their grandchildren – initially because prime age workers migrated, latterly because prime age adults have died – the old age pension has increasingly taken on the role of family capital. It is used both to purchase household consumption items but also as a form of private capital with which to establish small, informal businesses such as roadside sales of marketed products. Universal state pensions are unusual in sub-Saharan Africa, although the consequences of skip generation economics are beginning to be understood. Even where pensions are limited to ‘formal sector’ employers or public sector workers, the intra-family transfers arising from state pensions may be much more widespread than is commonly supposed. For example, in Francophone West Africa, the whole public pension can typically be inherited from a deceased beneficiary by his wife, wives, or even children. Pension schemes also contain provisions for childcare allowances. The implicit generosity of such schemes, measured from the point of view of the original recipient by the ‘replacement rate’ (the ratio of benefit payment to salary before retirement) is excessively large. However the wider distributional impact of such transfers may also be much larger than is commonly understood. Increasingly, then, we have to examine the potential for intergenerational intra-family transfers that arise from state pensions, investments in family businesses, household capital, and in access to trade and labour markets. When such an inventory of family resources and of household responses to these resources has been examined in more detail, the quest for policies to handle the economic consequences of the ‘ageing crisis’ in sub-Saharan Africa may be put on a sounder footing. Source(s): id21 Research Highlight: 31 May 2002
Further Information: Tel:
+44 (0)115 951 5619
Contact the contributor: edisney@zoom.co.uk Other related links:
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